Car finance/purchasing

GrassSnakeUK

Good afternoon fellow forum members.

I'm considering a buying a new (to me, I.e. used) car. My price range is in the 20 grand range.

I'm in a position where I can pay cash.... but should I ??

Reading the all knowing Internet, the opinions are varied.

Pay cash

Dont pay cash

Lease

Finance

You can't haggle if paying cash

Paying cash allows you to haggle "better"

Any thoughts or advice welcomed....

Thanks for reading.

GrassSnake

facade

Pay cash (or by bank transfer- there are money laundering hoops to jump through nowadays) unless you can get a higher return on your cash than the interest rate on finance.

Whatever you do, on a £20K car-

Make absolutely totally completely CERTAIN that the manufacturer warranty isn't void by missed services or services done outside the dealer network where you can't document in blood that manufacturer approved parts/fluids were used (I know, but why pick a fight if you don't have to) and make sure it will have manufacturer warranty or manufacturer extended warranty for the time you envisage owning it.

You can lease if it includes full warranty cover for the term of the lease and is the same or cheaper than your projected depreciation over the time you expect to own it, but be aware that if you want to terminate the lease early you usually have to pay it off as if you had kept it for the full term anyway.

You will be very lucky indeed to get "incentives" that make finance cheaper/preferable to paying in full on a second hand car.

400ixl

You can haggle with cash, you can also get benefits of finance.

On my last used car purchase, I got the price down of the car (well the price up of the trade in in reality as it looks better for them) and then did a partial finance (if I paid £10k on finance I got a free service pack and extended manufacturers warranty worth around £500). The finance was paid off in the cooling off period and i paid about £14 in interest to do that. Pretty standard, so you don't need to be lucky, having the cash enables you to play both sides.

One other consideration for me would be the technology in the car. I tend to keep my cars for a minimum of 5 years, which for most ICE cars is not much of an issue tech wise. However, if I was looking at an EV, 5 years is a lot of innovation going on both in battery and car tech. I would consider a PCP type deal on this type of car.

Other element is future value, as above EV cars are very variable as to their future value, so passing some of that risk to a financial institution may be worth considering.

The "can you get higher interest" question is a good one, but you need to think about whatever interest you can get today, will it be there tomorrow as rates drop. Only way to guarantee it is to put it into a fixed interest account for the period of the financing without locking it away so you cannot access it for the payments.

Personally I pay cash, but using the finance options with cancellation options where possible.

daveyjp

Re haggling.  You don't reveal how you are paying until the price is agreed.  Once price is agreed you then discuss options for paying and from that decide if finance or cash is cheaper.

Arunmor

You are not buying a new car, so there will be no manufacturers discounts etc.

You really need to do your homework here.  How much will I earn on £20k in the bank versus how much will I be paying in interest.

If you decide to go down the finance route then might be worth exploring a new car if its a ne EV then prices are getting hammered at the moment.

Do your numbers that will tell you the best course of action, the only number that you don't know will be future value (not necessarily relevant in all scenarios but useful to have when choosing make and model) but you do some research and you should get an idea.

Stateofart

In my experience, cash buyers are the worst.  They come with no 'extras' and so are financially the least lucrative buyers.  Garages make their money on:

The car

The deal (finance)

Part ex.

Extras such as insurances

If you walk into a dealership with cash, they are much less likely to do a deal.  Find out what the finance package is.  There may be incentives to take out the deal and pay it off straight away, which might qualify you for more discount as they are getting something.  BTW I have just bought two 20K plus cars and paid cash for both, none gave me any money off as a result.

GrassSnakeUK

Thanks for the replies and advice!

I really do appreciate it.

ididgetwhereiamtoday

Pay your deposit with a credit card so you get S75 protection if needed. If the garage won't accept credit card then walk away. Plenty will.

GrassSnakeUK

The finance was paid off in the cooling off period and i paid about £14 in interest to do that. Pretty standard, so you don't need to be lucky, having the cash enables you to play both sides.
Thanks for the reply.
How would I go about this, go through the motions of buying on finance and then after purchasing the car, get in touch with finance company direct and ask to pay full balance?

400ixl

GrassSnakeUK said:

The finance was paid off in the cooling off period and i paid about £14 in interest to do that. Pretty standard, so you don't need to be lucky, having the cash enables you to play both sides.
Thanks for the reply.
How would I go about this, go through the motions of buying on finance and then after purchasing the car, get in touch with finance company direct and ask to pay full balance?

Yes, you essentially take out the finance, signing the agreements etc. Once you have the car you contact the finance company within the 14 days and say you want to exercise your right to cancel under the cooling off period. You will then get a cost to settle (the original value plus a small amount of interest).

What you do need to check before signing up is whether the benefits remain in place if the finance is settled. I.e. that they don't cancel the service plan if you cancel the finance. Rare for them to do it, but always check.

GrassSnakeUK

400ixl said:

GrassSnakeUK said:

The finance was paid off in the cooling off period and i paid about £14 in interest to do that. Pretty standard, so you don't need to be lucky, having the cash enables you to play both sides.
Thanks for the reply.
How would I go about this, go through the motions of buying on finance and then after purchasing the car, get in touch with finance company direct and ask to pay full balance?

Yes, you essentially take out the finance, signing the agreements etc. Once you have the car you contact the finance company within the 14 days and say you want to exercise your right to cancel under the cooling off period. You will then get a cost to settle (the original value plus a small amount of interest).

What you do need to check before signing up is whether the benefits remain in place if the finance is settled. I.e. that they don't cancel the service plan if you cancel the finance. Rare for them to do it, but always check.

So, I would take delhvery/pick the car up and then ring up and pay the balance direct. Allowing me to haggle for a "finance deal" letting the seller gain his commission perks from the deal and then I get the best deal for a small interest payment... I like it.

As an addition to the story, I called into aVolvo garage today and asked to have a look round a V60... the 1st words out if the salesmanship mouth before he even went for the keys were "is it cash or finance or lease???